Nordson Corporation Reports Second Quarter Fiscal 2024 Results and Updates Annual Guidance
Second Quarter:
•Sales were $651 million
•Net income was $118 million
•Earnings per diluted share were $2.05
•Adjusted earnings per diluted share were $2.34
•EBITDA was $203 million, 31% of sales
Guidance:
•Updating full-year fiscal 2024 revenue guidance to the range of flat to 2% growth over record fiscal 2023 and adjusted earnings per diluted share to the range of $9.35 to $9.75 per share
WESTLAKE, Ohio--(BUSINESS WIRE)--May 20, 2024--Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal second quarter ended April 30, 2024. Sales were $651 million, comparable to the prior year’s second quarter sales of $650 million. The second quarter 2024 sales included a favorable acquisition impact of 5%, partially offset by an organic sales decrease of 4%. The organic sales decrease was driven by ongoing pressure in electronics product lines, partially offset by growth in industrial coatings systems and fluid solutions product lines.
Net income was $118 million, or $2.05 of earnings per diluted share, compared to prior year’s second quarter net income of $128 million, or $2.21 of earnings per diluted share. Adjusted net income was $135 million, a decrease from the prior year adjusted net income of $141 million. Second quarter 2024 adjusted earnings per diluted share were $2.34, a 4% decrease from the prior year adjusted earnings per diluted share of $2.45. The decrease was driven primarily by increased interest expense from prior year acquisitions.
EBITDA in the second quarter was $203 million, or 31% of sales, compared to prior year EBITDA of $203 million, or 31% of sales. EBITDA was flat as improved gross margins were offset by higher selling and administrative expenses primarily related to the first-year effect of the ARAG acquisition.
Commenting on the Company’s fiscal 2024 second quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, “Once again, the teams delivered a solid operating performance, delivering strong gross margins and 31% EBITDA margin. Our sales were in line with management expectations with the IPS and MFS segments delivering organic growth. While we see positive early indicators, our Advanced Technology Solutions segment remains impacted by the electronics cycle. I am pleased with our ability to manage profitability during this period.”
Second Quarter Segment Results
Industrial Precision Solutions sales of $367 million increased 9% from the prior year, inclusive of an acquisition impact and an organic sales increase of 2%. The organic sales increase was driven primarily by industrial coatings systems and packaging product lines. Operating profit was $118 million, an increase of $6 million from the prior year. EBITDA in the quarter was $132 million, or 36% of sales, an 11% increase from the prior year second quarter EBITDA of $119 million, or 35% of sales. The year-over-year increase was driven by the ARAG acquisition and higher organic sales and gross profit.
Medical and Fluid Solutions sales of $169 million increased 2% compared to the prior year second quarter. The increase was driven by growth in the fluid and interventional solutions product lines. Operating profit was $49 million, an increase of $1 million from the prior year. EBITDA in the quarter was $63 million, or 37% of sales, flat versus the prior year second quarter EBITDA of $63 million, or 38% of sales.
Advanced Technology Solutions sales of $115 million decreased 22% compared to the prior year second quarter. The organic sales decrease was driven by weakness across the segment. Operating profit was $19 million, a decrease of $7 million from the prior year with a decremental margin of 22%. EBITDA in the quarter was $24 million, or 21% of sales, a decrease from the prior year second quarter EBITDA of $32 million, or 22% of sales.
1
Outlook
The Company is entering the third quarter of fiscal 2024 with approximately $700 million in backlog, which continues to normalize and remain concentrated in systems businesses. Based on current visibility and order entry trends, the Company is updating its full-year revenue guidance range to flat to 2% growth over record fiscal 2023 and adjusted earnings per diluted share to the range of $9.35 to $9.75 per diluted share. Third quarter fiscal 2024 sales are forecasted in the range of $645 to $670 million with adjusted earnings in the range of $2.25 to $2.40 per diluted share.
Reflecting on the outlook, Nagarajan continued, “As we move into the second half of fiscal 2024, the positive indicators in the electronics end markets have not yet converted into orders needed to meet our previously issued guidance. We are also experiencing increased pressure from the agriculture cycle in Europe, which is causing OEMs to slow investments in spray implement purchases. In each of these cases, we believe the impact is temporary and we remain confident in the long-term growth drivers of these respective end markets. Our core strengths remain: a diversified portfolio, close to the customer business model, high-level of recurring revenue, NBS Next growth framework, and commitment to innovation. All of this positions Nordson well to deliver our long-term Ascend Strategy goals.”
Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, May 21, 2024 at 8:30 a.m. eastern time, which can be accessed at https://investors.nordson.com. Information about Nordson’s investor relations and shareholder services is available from Lara Mahoney, vice president, investor relations and corporate communications at (440) 204-9985 or lara.mahoney@nordson.com.
The Company’s definition of adjusted earnings excludes acquisition related amortization for both current and historical periods. It is not possible for the Company to identify the amount or significance of future adjustments associated with acquisition and integration costs, restructuring costs, acquisition-related amortization, certain non-operating or income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance to a comparable GAAP range.
Certain statements contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “outlook,” “guidance,” “continue,” “target,” or the negative of these terms or comparable terminology. These statements reflect management’s current expectations and involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, U.S. and international economic conditions; financial and market conditions; currency exchange rates and devaluations; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan; the effects of changes in U.S. trade policy and trade agreements; the effects of changes in tax law; and the possible effects of events beyond our control, such as political unrest, including the conflict between Russia and Ukraine, acts of terror, natural disasters and pandemics, including the recent coronavirus (COVID-19) pandemic and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recently filed Annual Report on Form 10-K and in its Forms 10-Q filed with the Securities and Exchange Commission, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement in this press release.
Nordson Corporation is an innovative precision technology company that leverages a scalable growth framework through an entrepreneurial, division-led organization to deliver top tier growth with leading margins and returns. The Company’s direct sales model and applications expertise serves global customers through a wide variety of critical applications. Its diverse end market exposure includes consumer non-durable, medical, electronics and industrial end markets. Founded in 1954 and headquartered in Westlake, Ohio, the Company has operations and support offices in over 35 countries. Visit Nordson on the web at www.nordson.com, linkedin/Nordson, or www.facebook.com/nordson.
2
NORDSON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except for per-share amounts)
Three Months Ended
Six Months Ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Sales
$
650,642
$
650,165
$
1,283,835
$
1,260,642
Cost of sales
284,765
298,040
569,531
579,650
Gross profit
365,877
352,125
714,304
680,992
Gross margin %
56.2
%
54.2
%
55.6
%
54.0
%
Selling & administrative expenses
197,261
179,618
386,253
364,266
Operating profit
168,616
172,507
328,051
316,726
Interest expense - net
(18,555)
(9,475)
(38,953)
(19,418)
Other expense - net
(785)
(1,405)
(1,123)
(4,601)
Income before income taxes
149,276
161,627
287,975
292,707
Income taxes
31,059
34,064
60,186
60,883
Net income
$
118,217
$
127,563
$
227,789
$
231,824
Weighted-average common shares outstanding:
Basic
57,222
57,184
57,142
57,177
Diluted
57,681
57,680
57,617
57,721
Earnings per share:
Basic earnings
$
2.07
$
2.23
$
3.99
$
4.05
Diluted earnings
$
2.05
$
2.21
$
3.95
$
4.02
3
NORDSON CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
April 30, 2024
October 31, 2023
Cash and cash equivalents
$
125,446
$
115,679
Receivables - net
530,283
590,886
Inventories - net
443,578
454,775
Other current assets
86,283
67,970
Total current assets
1,185,590
1,229,310
Property, plant and equipment - net
395,595
392,846
Goodwill
2,782,909
2,784,201
Other assets
807,777
845,413
$
5,171,871
$
5,251,770
Notes payable and debt due within one year
$
119,328
$
115,662
Accounts payable and accrued liabilities
416,683
466,427
Total current liabilities
536,011
582,089
Long-term debt
1,414,363
1,621,394
Other liabilities
433,226
450,227
Total shareholders' equity
2,788,271
2,598,060
$
5,171,871
$
5,251,770
4
NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Six Months Ended
April 30, 2024
April 30, 2023
Cash flows from operating activities:
Net income
$
227,789
$
231,824
Depreciation and amortization
66,264
53,535
Other non-cash items
10,281
11,458
Changes in working capital
(3,435)
(45,857)
Other
(5,935)
36,945
Net cash provided by operating activities
294,964
287,905
Cash flows from investing activities:
Additions to property, plant and equipment
(21,907)
(15,349)
Acquisition of businesses, net of cash acquired
—
(377,843)
Other - net
6,730
39
Net cash used in investing activities
(15,177)
(393,153)
Cash flows from financing activities:
Issuance (repayment) of long-term debt
(204,372)
184,617
Repayment of finance lease obligations
(2,881)
(2,775)
Dividends paid
(77,796)
(74,463)
Issuance of common shares
27,219
11,808
Purchase of treasury shares
(7,927)
(54,365)
Net cash provided (used) in financing activities
(265,757)
64,822
Effect of exchange rate change on cash:
(4,263)
6,042
Net change in cash and cash equivalents
9,767
(34,384)
Cash and cash equivalents:
Beginning of period
115,679
163,457
End of period
$
125,446
$
129,073
5
NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
Three Months Ended
Sales Variance
April 30, 2024
April 30, 2023
Organic
Acquisitions
Currency
Total
SALES BY SEGMENT
Industrial Precision Solutions
$
366,991
$
335,807
1.5
%
8.6
%
(0.8)
%
9.3
%
Medical and Fluid Solutions
168,966
166,526
1.8
%
—
%
(0.3)
%
1.5
%
Advanced Technology Solutions
114,685
147,832
(21.6)
%
—
%
(0.8)
%
(22.4)
%
Total sales
$
650,642
$
650,165
(3.7)
%
4.5
%
(0.7)
%
0.1
%
SALES BY GEOGRAPHIC REGION
Americas
$
294,428
$
278,731
2.9
%
2.3
%
0.4
%
5.6
%
Europe
182,070
167,904
(4.4)
%
12.5
%
0.3
%
8.4
%
Asia Pacific
174,144
203,530
(12.3)
%
0.7
%
(2.8)
%
(14.4)
%
Total sales
$
650,642
$
650,165
(3.7)
%
4.5
%
(0.7)
%
0.1
%
Six Months Ended
Sales Variance
April 30, 2024
April 30, 2023
Organic
Acquisitions
Currency
Total
SALES BY SEGMENT
Industrial Precision Solutions
$
721,538
$
647,353
1.9
%
9.6
%
—
%
11.5
%
Medical and Fluid Solutions
328,492
320,813
2.4
%
—
%
—
%
2.4
%
Advanced Technology Solutions
233,805
292,476
(19.6)
%
—
%
(0.5)
%
(20.1)
%
Total sales
$
1,283,835
$
1,260,642
(2.9)
%
4.9
%
(0.2)
%
1.8
%
SALES BY GEOGRAPHIC REGION
Americas
$
568,440
$
543,610
1.3
%
2.8
%
0.5
%
4.6
%
Europe
361,380
330,843
(5.7)
%
13.4
%
1.5
%
9.2
%
Asia Pacific
354,015
386,189
(6.7)
%
0.7
%
(2.3)
%
(8.3)
%
Total sales
$
1,283,835
$
1,260,642
(2.9)
%
4.9
%
(0.2)
%
1.8
%
6
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - NET INCOME TO EBITDA (Unaudited)
(Dollars in thousands)
Three Months Ended
Six Months Ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
Net income
$
118,217
$
127,563
$
227,789
$
231,824
Income taxes
31,059
34,064
60,186
60,883
Interest expense - net
18,555
9,475
38,953
19,418
Other expense - net
785
1,405
1,123
4,601
Depreciation and amortization
32,720
27,100
66,264
53,535
Inventory step-up amortization (1)
—
—
2,944
4,306
Severance and other
2,078
3,439
2,078
3,439
Acquisition-related costs (1)
—
—
597
5,989
EBITDA (non-GAAP) (2)
$
203,414
$
203,046
$
399,934
399,934
$
383,995
(1) Represents fees, severance and non-cash inventory charges associated with acquisitions.
(2) EBITDA is a non-GAAP measure used by management to evaluate the Company's ongoing operations. EBITDA is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions, plus depreciation and amortization.
7
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - EBITDA (Unaudited)
(Dollars in thousands)
Three Months Ended
Six Months Ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
SALES BY SEGMENT
Industrial Precision Solutions
$
366,991
$
335,807
$
721,538
$
647,353
Medical and Fluid Solutions
168,966
166,526
328,492
320,813
Advanced Technology Solutions
114,685
147,832
233,805
292,476
Total sales
$
650,642
$
650,165
$
1,283,835
$
1,260,642
OPERATING PROFIT
Industrial Precision Solutions
$
117,831
$
111,773
$
226,195
$
214,093
Medical and Fluid Solutions
48,993
47,922
95,093
87,307
Advanced Technology Solutions
18,784
26,090
37,822
43,053
Corporate
(16,992)
(13,278)
(31,059)
(27,727)
Total operating profit
$
168,616
$
172,507
$
328,051
$
316,726
OPERATING PROFIT ADJUSTMENTS (1)
Industrial Precision Solutions
$
—
$
—
$
3,541
$
—
Medical and Fluid Solutions
—
1,479
—
1,479
Advanced Technology Solutions
2,078
1,960
2,078
12,255
Total adjustments
$
2,078
$
3,439
$
5,619
$
13,734
DEPRECIATION & AMORTIZATION
Industrial Precision Solutions
$
13,920
$
7,285
$
28,300
$
14,130
Medical and Fluid Solutions
13,564
13,683
27,269
27,308
Advanced Technology Solutions
3,284
4,010
6,725
7,822
Corporate
1,952
2,122
3,970
4,275
Total depreciation & amortization
$
32,720
$
27,100
$
66,264
$
53,535
EBITDA (NON-GAAP) (2)
Industrial Precision Solutions
$
131,751
36%
$
119,058
35%
$
258,036
36%
$
228,223
35%
Medical and Fluid Solutions
62,557
37%
63,084
38%
122,362
37%
116,094
36%
Advanced Technology Solutions
24,146
21%
32,060
22%
46,625
20%
63,130
22%
Corporate
(15,040)
(11,156)
(27,089)
(23,452)
Total EBITDA
$
203,414
31%
$
203,046
31%
$
399,934
31%
$
383,995
30%
(1) Represents severance as well as fees and non-cash inventory charges associated with acquisitions.
(2) EBITDA is a non-GAAP measure used by management to evaluate the Company's ongoing operations. EBITDA is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions, plus depreciation and amortization.
8
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED NET INCOME AND EARNINGS PER SHARE (Unaudited)
(Dollars in thousands)
Three Months Ended
Six Months Ended
April 30, 2024
April 30, 2023
April 30, 2024
April 30, 2023
GAAP AS REPORTED
Operating profit
$
168,616
$
172,507
$
328,051
$
316,726
Other / interest expense - net
(19,340)
(10,880)
(40,076)
(24,019)
Net income
118,217
127,563
227,789
231,824
Diluted earnings per share
$
2.05
$
2.21
$
3.95
$
4.02
Shares outstanding - diluted
57,681
57,680
57,617
57,721
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization
$
—
$
—
$
2,944
$
4,306
Acquisition-related costs
—
—
597
5,989
Severance and other
2,078
3,439
2,078
3,439
ACQUISITION AMORTIZATION OF INTANGIBLES
$
18,823
$
14,044
38,210
27,917
Total adjustments
$
20,901
$
17,483
$
43,829
$
41,651
Adjustments net of tax
$
16,556
$
13,798
$
34,669
$
32,988
EPS effect of adjustments and other discrete tax items
$
0.29
$
0.24
$
0.60
$
0.57
NON-GAAP MEASURES-ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
Adjusted Net income (1)
$
134,773
$
141,361
$
262,458
$
264,812
Adjusted Diluted earnings per share (2)
$
2.34
$
2.45
$
4.55
$
4.59
(1) Adjusted net income is a non-GAAP measure defined as net income plus tax effected adjustments and other discrete tax items.
(2) Adjusted earnings per share is a non-GAAP measure defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.
Management uses certain non-GAAP measures, such as adjusted net income, adjusted EPS and EBITDA, internally to make strategic decisions, forecast future results, and evaluate the Company's current performance. Given management's use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in the Company's core business across different time periods. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures to other companies' non-GAAP financial measures, even if they have similar names. Amounts may not add due to rounding.
